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PledgeMusic Admits Late Payments but Promises, ‘We’re Working Through It’

PledgeMusic is based on a lovely idea: a marketplace where serious music fans can buy everything from vinyl to personal visits directly from artists and help them to fund their recordings and other projects. It aims to be a cross between a traditional crowdfunding site and a label-services company, and also a “community” that now claims more than 3.4 million fans and 50,000 artists.

The model, which evolved out of cofounders Benji Rogers and Jayce Varden’s former band a decade ago, is to involve the audience formally in a project’s creation: Fans can contribute to recording costs (“crowdfunding”) as well as “pre-order” recorded product, merchandise (T-shirts, caps, etc.) and experiences (ranging from personalized phone calls to performances at fans’ homes), and are then updated on the artist’s progress via photos, videos, blog posts and ultimately the finished products, ideally building a community of superfan/small-business investor hybrids in the process. For this, Pledge takes a flat 15% fee of the money raised for crowdfunding campaigns (but only if the artist reaches their financial goal) and for pre-orders, and promises a fair revenue split and quick payment.

While the company claims many success stories — Melissa Etheridge, the Flaming Lips, Lindsey Stirling and Bring Me the Horizon are featured on its website — several major artists tell Variety that in recent months Pledge has fallen far behind in its payments, including two who said they were owned sums in the “middle five figures” (both of those artists since have been paid in part or in full). One major artist, based on the feedback it received from colleagues in the industry, was on the verge of pulling out of a crowdfunding campaign but was ultimately convinced to stay.

In a statement to Variety, CEO Dominic Pandiscia acknowledged those claims and said in an email: “It’s understood that certain customers may have been unhappy over the last six months. The company has had some difficulty dealing with a larger volume of campaigns. The intention is to add value in every situation, and there is some work ahead to achieve that. With respect to payments, there have certainly been payment delays, but the company has always paid artists and should be completely caught up in the near future. The team has been strengthened and is addressing any concerns as the company grows.” (He, Varden and Rogers, the latter of whom is now a board advisor, declined further comment.)

In a separate conversation, a Pledge executive who chose to remain anonymous pointed to too-rapid growth and a change in the company’s payment structure as primary sources of the problems; PayPal, which was built into the company’s system, ceased working with some crowdfunding companies late last year.

“The company has grown radically,” the source said. “Last January and February 183 campaigns were launched; in August and September it was 313. The company finished the year up nearly 30% in billing and has been growing the business and bringing in more staff. But the business-management infrastructure could not keep pace with the growth — and then, at the busiest time of the year, a change had to be made in payment processing. This happened after a record year, seven consecutive quarters of growth, more campaigns than ever — and suddenly the company had to totally reconfigure how it was getting people paid.”

While the executive stressed that the situation is improving, Variety spoke with a dozen Pledge artists and found a vast range of experiences: from all good to all bad; from being satisfied with the crowdfunding option but not the pre-order to the opposite; from too much attention from company reps to nonexistent attention (many spoke of challenges arising from Pledge’s high staff turnover).

While Pledge is upfront about which functions it does and does not fulfill, it can be difficult even for seasoned artists not to perceive it as a traditional record company. It’s not: Artists are responsible for their own product manufacture and fulfillment (although several spoke of being forcefully steered by Pledge reps toward certain more-expensive vendors); Pledge handles the payments.

While many artists face challenges taking so much control of their own business, others have taken to the model like fish to water.

“PledgeMusic has been nothing short of amazing for me,” says former Jellyfish frontman and current Beck keyboardist Roger Manning. “I can establish regular, mass communication directly with my fan base and have them literally guide and inspire me as to what they would enjoy hearing from me next.”

Fair enough, but Manning also could teach a master’s course on how to be a PledgeMusic high roller: In addition to an exhaustive range of offerings around his latest releases, he’s selling signed posters and handwritten lyric sheets, personal voicemails, Skype interviews, made-to-order songs, studio sessions, and “so much more!” And according to his “memorabilia” section, he’s made at least $20,000 selling old stage costumes and keyboards. (A rep for Manning did not immediately respond to Variety’s question about whether Pledge receives 15% of memorabilia sales.)

Another satisfied customer is former “American Idol” season-seven winner David Cook, who initially used the pre-order service for his 2015 EP “Digital Vein,” but ramped up significantly for his recent EP “Chromance,” focusing on fan events and VIP access at his concerts. “If I were a fan these are the kinds of unique experiences I would want,” he says, adding that the business experience was “overwhelmingly positive” and that the Pledge team was “super helpful and came to the table with ideas.”

On the other hand, one of the artists owed five figures is long-running North Carolina jazz-roots group Squirrel Nut Zippers, whose co-manager Keith Hagan says he had to hound the company for weeks before receiving payment. “The agreement clearly states that you will be paid in full within 30 days of your campaign wrap,” he says. “After chasing them for about two months we finally got it, but that’s just because I was a squeaky wheel and said I would start talking about it publicly. Their sole job was to collect the money and to try to draw attention to the fact that we had a presale and an album coming out, and they failed on both. The only outward [promotion] that came from Pledge was a couple of tweets and Facebook posts.”

A member of a major band who recently worked with Pledge was equally critical. “Over the course of the campaign I can’t recall a single invoice that was paid to the band or any vendor associated with our campaign that did not require multiple submissions and constant badgering,” the bandmember said. “So rather than putting my full attention to raising money for my band and being fully engaged in the actual campaign, I have spent the bulk of my time fighting to get existing funds out of Pledge.”

Such situations leave the artist — who is directly responsible for fulfillment — reaching deep into their own pockets. “It was absurd: We were selling merchandise that was not yet made, Pledge was holding all the money earned from pre-selling it, and then we were having to raise money elsewhere to get [the merchandise] manufactured on time.”

While that artist recently received around half of the money it is owed, “This puts our remaining balance at roughly [low five figures], but an unknown portion of this will go to pay the remaining balances of fulfillment, so it’s unclear how much I can claim is actually ours until all final invoices are submitted.”

And Dave Wakeling of the English Beat, who’s worked with Pledge for four years, says he’s “lost so many hours of sleep” over problems with the company — but only with the “harrowing” pre-order service (he was satisfied with the crowdfunding).

“It’s a tremendous idea, I’ve made a lot of friends through it and on balance it’s been positive,” he says. “But it’s cost me fortunes. I think maybe they’ve just grown too much — there are too many chiefs, I’ve got 15 people on copy for my emails, each with their own ideas.” Many artists, including Wakeling, talked of having to make up for Pledge’s shortcomings by fulfilling orders at their own expense.

Despite the problems, the unnamed executive’s belief in the company and its model has not wavered. “PledgeMusic is truly the best answer for artists,” the executive says. “The revenue splits are more generous than most other commercial platforms that are not pure crowdfunding, plus it is a very active marketing and data-harvesting company — data which is shared with the artist. Streaming is great, but it’s also a format that can underserve the fan when they want more from their favorite artists; they have to hunt around the web or eBay. PledgeMusic is a marketplace that’s actually there to capture those fans, and the opportunity is in front of the company because the more that streaming matures, the more passionate fans will be seeking ways to have a deeper relationship with their favorite artists.”

For all involved — including this writer — the company’s DIY, artist-centric stance makes criticism a morally challenging situation: Will this article make things worse for the company and by extension artists who have invested so much of their livelihoods in a PledgeMusic campaign? It’s a dilemma that stretches to the artists: The bandmember who chose to remain anonymous did so because of differing opinions within the group about how to handle the problems.

“I’m a bit fueled by rage and a desire to flip tables,” the bandmember said, “but then one of my bandmates feels it’s our duty to act in a way that protects other bands, and another wants to protect our record and reputation.”

The executive concludes by promising that “these are growing pains: The company owns it and is not making excuses and are working through them every day. PledgeMusic pays people faster than most other platforms, and as that expectation is set and not met — even with reasonable facts behind it — it’s easy to understand why artists get upset.”

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